The latest CPI report came out showing that the annual CPI now stands at 2.4%. This was a little lower than expected. It is still not at the Fed’s supposed 2% target.
Even though we will hear that inflation is going down, prices are still going up. The rate at which prices are going up is going down.
In other words, things are still 2.4% more expensive than they were a year ago. This is an added 2.4% to the already-higher prices from last year.
Compounding interest is magical for investors. Unfortunately, it is a nightmare when it comes to price inflation for savers. It is a compounding reduction in the value of your money.
Celebrating Dow 50,000
Pam Bondi was on Capitol Hill this past week to testify about the Epstein files. She pointed out that the markets are hitting all-time highs, including the Dow hitting 50,000. She asked why we aren’t talking about this instead.
Bondi seemed to be reading from a script at times. Maybe she didn’t know the stock market numbers. If somebody wrote that script for her, they should be fired. Pam Bondi should also be fired. She should probably be in jail.
We should be happy that Bondi wanted to talk about the Dow hitting 50,000 instead of the Epstein files. Her message was a political loser to say the least.
To answer Pam Bondi’s question about why they weren’t talking about Dow 50,000 that day:
- Pam Bondi, you are the attorney general, not the Treasury secretary or the chair of the Federal Reserve.
- Pam Bondi, you were in front of Congress to testify on the Epstein files, not on the state of the stock market.
- Pam Bondi, covering up a massive blackmail and pedophile ring is important to some people. For some people, it means more to them than the returns in their 401k account.
There also seems to be a bit of irony that the Dow 50,000 benefits many of the rich and powerful people whom we might refer to as the ruling elite. There is an overlap with the ruling elite who are highly exposed in the Epstein files.
This could be one of the biggest political miscalculations in a long time. This should be enough to force Pam Bondi out, but you never know with this administration. Meanwhile, Trump is posting messages saying that Thomas Massie is a loser and that Pam Bondi did a great job. If this was a great job, you really have a lot of problems.
The memes are already coming out on this one. Whenever someone brings up an uncomfortable topic, the response is: “Why are we even talking about this? The Dow just hit 50,000.”
Stocks and the Economy
Bondi was trying to suck up to Trump by touting his economy. Of course, the stock market is not the economy. Biden was trying the same trick when he was in office. The sentiment was: “Forget about the rising prices of your groceries and your car insurance. The markets are doing great.”
There is probably a slight majority of Americans who actually own stocks Most of the people who do own stocks have a modest brokerage account or 401k/ retirement account.
If someone has $100,000 in a 401k and it goes up 15% in one year, sure they are probably happy with the return. But that doesn’t really help offset the higher credit card bills every month from groceries. It doesn’t do much to make you feel better about your rising insurance costs. If you need a new roof that costs $25,000, that $15,000 gain in your retirement account doesn’t seem to carry a lot of weight.
Also, we are far from guaranteed that these abnormal returns will continue. The day after Bondi touted Dow 50,000, it lost over 1% the following day. What if the Dow proceeds to fall to 30,000 over the next year? Will Pam Bondi then be willing to talk about a giant pedophile ring run by our ruling elites?
You can be almost guaranteed that overall prices will continue to go up, even if they go up at a slower pace. With the stock market, this is far from guaranteed. Stocks tend to always go up over time because of inflation itself. But you can easily have a bear market that lasts for years.
That is one of the notable things of recent times, particularly over the last 5 years. There is a major disconnect between the stock market and living standards. Even though we hear about good times on CNBC in terms of stocks, this is not how the average American is feeling.
Even if the stock indexes continue to hit new highs, this is a major political miscalculation by the Trump administration. If stocks go into a bear market, you might see the lowest approval ratings ever for a president.